[Federal Register Volume 77, Number 246 (Friday, December 21, 2012)]
[Rules and Regulations]
[Pages 75766-75780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30592]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 22, and 52

[FAC 2005-64; FAR Case 2011-028; Docket 2011-028; Sequence 1]
RIN 9000-AM21


Federal Acquisition Regulation; Nondisplacement of Qualified 
Workers Under Service Contracts

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement an Executive order 
for nondisplacement of qualified workers under service contracts, as 
implemented in Department of Labor regulations.

DATES: Effective Date: January 18, 2013.
    Applicability Date: This final rule is applicable to solicitations 
issued on or after the effective date.
    Contracting officers are expected to work with their existing 
service contractors and bilaterally modify their contracts, to the 
extent feasible, to include the clause at FAR 52.222-17. As an 
alternative, contracting officers should consider entering into 
bilateral modifications with existing service contractors to agree to 
perform paragraph (c) of the clause at FAR 52.222-17, which: (1) 
Informs the existing predecessor contractor's workforce of their right 
of first refusal; and (2) provides the list of service employees to the 
contracting officer no less than 30 days before contract completion. 
Contracting officers shall document the contract files of their 
existing service contracts to describe the steps that were taken.

FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, 
at 202-501-0650 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-64, FAR Case 2011-
028.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule at 77 FR 26232 on May 
3, 2012, to implement Executive Order (E.O.) 13495, Nondisplacement of 
Qualified Workers Under Service Contracts, dated January 30, 2009, 
published at 74 FR 6103 on February 4, 2009, and the Department of 
Labor (DOL) regulations at 29 CFR part 9. This final rule amends the 
FAR to add subpart 22.12 and a new clause at FAR 52.222-17, providing 
the policy of the Federal Government, as expressed in E.O. 13495, to 
require service contractors and their subcontractors under successor 
contracts to offer employees of the predecessor contractor and its 
subcontractors a right of first refusal of employment for positions for 
which they are qualified. Twenty seven respondents submitted comments 
on the proposed rule.

[[Page 75767]]

    On January 4, 2011, Public Law 111-350 enacted a new codified 
version of Title 41 United States Code (U.S.C.), entitled ``Public 
Contracts.'' The CAAC and DARC published a proposed rule on September 
18, 2012, at 77 FR 57950 to update all references to Title 41 in the 
FAR to conform to the positive law codification. As part of these 
changes, the proposed rule would replace the term ``Service Contract 
Act'' with the term ``Service Contract Labor Standards statute'' (SCLS 
statute). If this change is adopted through that rulemaking, similar 
conforming changes in the use of terms will be made in the text to this 
final rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the proposed rule as a result of those comments are 
provided as follows:

A. Summary of Significant Changes

     Revised FAR 22.1200, Scope of subpart, to make it clear 
that the DOL regulations (29 CFR part 9) implementing E.O. 13495 are 
applicable.
     Revised the policy, FAR 22.1202, to clarify the 
applicability of the subpart.
     Revised FAR 22.1203-3, Waiver, to require the approval of 
waivers by the agency Senior Procurement Executive, without power of 
redelegation.
     Added three subsections to FAR 22.1203 to address ``Method 
of job offer,'' ``Exceptions,'' and ``Reduced staffing.''
     Added cross-references throughout FAR subpart 22.12 to the 
applicable section of the DOL implementing regulations.
     For clarity, a definition of ``service employee'' was 
added, and the term ``service employee'' is used throughout the rule.

 B. Analysis of Public Comments

1. General Comments
    Comments: Two respondents expressed support for the proposed rule 
and the underlying policy concerns it addresses, including minimizing 
the risk of disruption of services during transition between 
predecessor and successor contractors and efficiency through the 
employment of trained employees.
    Response: Although no response is required, the FAR Council 
appreciates all comments.
    Comments: A respondent questioned the need for this rule, stating 
that most contractors try to hire incumbents where it makes sense. This 
respondent also expressed concern that the proposed rule would 
interfere with the employer/employee relationship and convert covered 
contracts to personal services contracts.
    Response: In accordance with E.O. 13495 section 6(b), the Federal 
Acquisition Regulatory Council (FAR Council) is required to issue 
regulations implementing the E.O. Based upon the statement that most 
contractors try to hire incumbents, it does not appear that this rule 
will disrupt current hiring practices. Regarding the concern that this 
rule will interfere with the employer/employee relationship and convert 
covered service contracts to personal services contracts, nothing in 
this rule establishes an employer/employee relationship between the 
Government and a contractor's employees.
2. Out-of-Scope Comments
    Comments: A respondent stated that evaluation criteria must focus 
on transition plans instead of staffing plans. Another respondent 
stated the belief that E.O. 13495 was short-sighted and that the 
Federal Government should not require the successor to hire predecessor 
contractor employees. The same respondent also stated that there are 
risks as well as rewards in hiring and training a workforce when 
competing for contracts. Another respondent questioned why the 
Government has no faith in open market efficiencies and why it is 
willing to exchange poor performance on contracts to provide longtime 
employment for poor job performers. Another respondent stated that the 
nondisplacement rule conflicts with the Service Contract Act (SCA) 
statute because the SCA does not authorize the FAR Council, the DOL, or 
the President to require successor contractors to hire predecessor 
contractor employees who are covered by the SCA. The same respondent 
stated that the rule does not provide evidence that its implementation 
will result in greater efficiencies in Federal procurement. This 
respondent felt that, because the rule conflicts with the SCA, it must 
be withdrawn in its entirety. One respondent expressed concern that, by 
requiring the successor contractor to hire the predecessor contractor's 
employees, the contracting officer would be dictating how contractors 
staff their contracts.
    Response: The purpose of this rule is to implement E.O. 13495, 
Nondisplacement of Qualified Workers Under Service Contracts and the 
DOL implementing regulations. Issues relating to the scope or coverage 
of either the E.O. or the DOL implementing regulations are outside the 
scope of this final rule.
    Comments: One respondent asked the purpose of the rule. The 
respondent stated it would be more costly for successor contractors to 
train an entire workforce. The respondent asked whether the rule was 
intended to unionize everyone.
    Response: The preamble of E.O. 13495 states that a carryover 
workforce ``provides the Federal Government the benefits of an 
experienced and trained work force.'' In cases where the agency 
believes that extensive training would be needed to learn new 
technology or processes that would not be required of a new workforce, 
the agency could consider waiving FAR subpart 22.12. (See 29 CFR 
9.4(d)(4)(ii)(A)).
    Comments: One respondent indicated that this rule would seem to 
favor time-and-material contracting instead of fixed-price contracting. 
The respondent indicates that in order to be most beneficial to the 
Government, vendors would need the ability to be creative and structure 
the approach in such a way that is flexible for technology changes and 
allows the vendor the best way to accomplish the objectives.
    Response: The respondent's comment is outside the scope of this 
case. Nothing in this rule addresses or limits the type of contract to 
be used for service contracts.
    Comments: A respondent recommended that the Councils consider 
possible privacy and liability implications.
    Response: This comment is outside the scope of the FAR rule, as the 
FAR final rule is implementing the requirements of the E.O. and the DOL 
implementing regulations at 29 CFR part 9, which would have considered 
this issue (see 76 FR 53720 at 53731-53732).
3. Applicability
    Comments: A respondent asked whether this rule will apply only to 
contracts covered by the SCA and whether professional services will be 
exempted. Another respondent stated that the proposed rule posed 
serious issues in contracting for information technology functions 
because of the need to be responsive to rapid changes in technology and 
opportunities for cost savings. A third respondent asked whether the 
rule would apply to competed task orders or to service contracts 
performed outside the United States.

[[Page 75768]]

    Response: There appears to be a broad misunderstanding of the types 
of work that are exempt from the SCA. Professional services (including 
professional services for information technology) are exempt from 
applicability of FAR subpart 22.12 for the reasons that follow. Section 
2 of E.O. 13495 defines ``employee'' to mean a ``service employee'' as 
defined in the SCA. The definition of ``service employee'' at 41 U.S.C. 
6701(3) provides, in part, that it ``does not include an individual 
employed in a bona fide executive, administrative, or professional 
capacity, as those terms are defined in part 541 of title 29, Code of 
Federal Regulations.'' The regulation referenced, 29 CFR 541, entitled 
``Defining and Delimiting the Exemptions for Executive Administrative, 
Professional, Computer, and Outside Sales Employees,'' refers to 
``exempt professionals'' as those whose primary duty is the 
``performance of work requiring knowledge of an advanced type in a 
field of science or learning customarily acquired by a prolonged course 
of specialized intellectual instruction or the performance of work 
requiring invention, imagination, originality or talent in a recognized 
field of artistic or creative endeavor'' (29 CFR 541.3(b)(4)).
    FAR 22.1003-5, entitled ``Some examples of contracts covered,'' 
sets forth examples. One example of a contract covered by the SCA, at 
FAR 22.1003-5(k), is ``maintenance and repair of all types of 
equipment, for example, electronic, office, and related business and 
construction equipment.'' The definition of ``service employee'' 
addresses this concept. Therefore, FAR 22.001, in the proposed rule, 
moved the definition of ``service employee'' from 22.1001 to 22.001 so 
that it would apply to this rule.
    The SCA applies to service contracts over $2,500, the principal 
purpose of which is to furnish services in the United States through 
the use of service employees. FAR subpart 22.10, entitled ``Service 
Contract Act of 1965, as amended,'' defines the term ``Act or Service 
Contract Act''. The definition of ``Service contract'' is moved to FAR 
22.001. Paragraph (c)(1)(ii) of the clause at FAR 52.222-17 does not 
give a right of first refusal to ``any service employee(s) of the 
predecessor contractor who are not service employees within the meaning 
of the Service Contract Act, 41 U.S.C. 6701(3).''
    The term ``United States,'' for purposes of the implementation of 
E.O. 13495, is defined at FAR 22.1201. The rule does not apply to 
service contracts that are performed entirely outside the United 
States.
    If the clause is in the basic contract, then the clause applies to 
task orders issued under the contract to which the SCA applies. The 
exemptions to the SCA are listed at FAR 22.1003-3.
    Comments: One respondent indicated that the FAR rule did not 
incorporate many of the provisions in the DOL rule. The respondent also 
indicated that the FAR rule differs from the DOL rule in many ways but 
fails to provide clear guidance as to the extent to which both sets of 
rules may be applicable. The respondent indicated that, for each 
provision in the DOL rule that is neither repeated nor cross-
referenced, the FAR final rule should expressly state that the proposed 
rule does not incorporate the relevant DOL provision so contractors 
have clear direction on their obligations.
    Response: The final rule has been revised to include guidance 
incorporating the DOL rule and adding cross-references throughout the 
FAR coverage where appropriate. The FAR and the DOL rule are 
consistent, and the changes noted above should eliminate any questions.
    Comments: A respondent expressed a concern that the rule would 
hinder competition because it would be difficult for competitors to get 
commitments from individuals to fill key personnel positions when they 
can be displaced by the incumbent personnel. This concern was echoed by 
another respondent, who felt that, if the Government were to require 
key staff resumes, then, the Government would also have to provide 
information regarding the key incumbent personnel the Government 
expects the successor contractor to hire. Other respondents stated that 
the rule will create disincentives for a firm to compete on a 
competitive project because the firm will not be able to employ its own 
staff and/or will have to make the case for not retaining incumbent 
staff.
    Response: If the key person position is covered by the SCA, then a 
qualified employee of the predecessor contractor must be given the 
right of first refusal.
    With regard to decreased competition, this rule could be one factor 
for a contractor to consider when deciding whether to participate in 
the Government market. The rule is unlikely to have a significant 
effect on competition.
    Comments: A respondent stated that the solicitation must provide 
direct labor information (salaries and benefits) for every labor 
category; otherwise, the respondent felt, the incumbent (predecessor) 
contractor would have an unfair competitive advantage. Another 
respondent expressed a similar concern: Given that ``only the incumbent 
contractor knows the qualifications and realistic costs of the affected 
personnel, how can any other offeror submit an adequate bid and the 
Government perform a realistic analysis of the bid when a portion of 
the proposal cannot be accurately determined until after contract 
award?'' This respondent was concerned that the right of first refusal 
would jeopardize a potential offeror's ingenuity in proposing a 
technical approach or solution based on limitations of the existing 
workforce. Further, a third respondent believed that offerors might 
tailor their personnel requirements to what was currently being done 
under the incumbent contract instead of proposing a more efficient 
solution. Another respondent expressed concern that the rule would 
limit offerors' ability to craft innovative solutions to Government 
requirements.
    Response: Under the SCA, the successor contractor must pay the wage 
rates and fringe benefits found by the DOL to prevail in the locality, 
unless the predecessor contractor is operating under a collective 
bargaining agreement. In the latter case, the successor contractor must 
pay wages and fringe benefits specified in the collective bargaining 
agreement (see FAR 22.1002 and 29 CFR 4.53), which would be an 
attachment to the solicitation.
    Each offeror must propose an efficient method of performing the 
required work as that offeror understands the statement of work. The 
proposed rule made clear, at paragraph (b) of the clause at FAR 52.222-
17, that the predecessor employees are offered a right of first refusal 
only for positions for which they are qualified; and the successor 
contractor and its subcontractors may employ fewer employees than did 
the predecessor contractor. The rule does not limit the technical 
solutions that may be proposed to meet Government requirements. It only 
implements the requirement to provide a right of first refusal to 
service contract employees of predecessor contractors in accordance 
with the regulations promulgated in this final rule and the DOL 
regulations set forth at 29 CFR part 9.
    Comments: A respondent stated that the ``same location'' limitation 
on applicability of FAR subpart 22.12 was not clear. The respondent 
asked whether it meant the same building, base, city, county, command, 
or something else. The respondent noted that many indefinite delivery/
indefinite quantity contracts require services in a wide geographic 
area and questioned whether, in the Washington, DC, area,

[[Page 75769]]

services to be performed at Fort Myer or the Navy Yard would be 
considered the same location.
    Response: Chapter 67, entitled ``Service Contract Labor 
Standards,'' of Title 41, United States Code, does not define ``same 
location.'' As a general matter, what constitutes the ``same location'' 
in this context will depend upon the geographic area in which 
performance under the predecessor and successor contracts occur. The 
determination of whether the predecessor and successor contract involve 
services at the ``same location'' may be resolved by reference to what 
the statement of work, or any similar contract provision (such as a 
statement of objectives) specified.
    Comments: One respondent asked how ``similar'' will be defined in 
``same or similar'' services. Another respondent asked how much 
variation in locations of performance would be permissible while 
claiming that a successor contract was for the same or similar job.
    Response: 29 CFR 9.2 defines ``same or similar service'' to mean 
``a service that is either identical to or has one or more 
characteristics that are alike in substance to a service performed at 
the same location on a contract that is being replaced by the Federal 
Government or a contractor on a Federal service contract.''
    Comments: A respondent noted that the proposed rule is silent on 
part-time or shared positions and asked whether such individuals must 
receive a bona fide offer of full time employment, given that they may 
be qualified to perform many other jobs.
    Response: The DOL notes that ``the Fair Labor Standards Act * * * 
does not define part-time or full-time employment; rather, this is 
generally a matter of agreement between the employer and the 
employee.'' (See www.dol.gov/dol/topic/workhours/full-time.htm). This 
is addressed at paragraph (a)(2) of 29 CFR 4.165, which states that the 
SCA ``makes no distinction, with respect to its compensation 
provisions, between temporary, part-time, and full-time employees, and 
the wage and fringe benefit determinations apply, in the absence of an 
express limitation, equally to all such service employees engaged in 
work subject to the Act's provisions.'' Therefore, the FAR does not 
provide an alternate definition of the term. If an individual is 
employed part-time by a predecessor, then the successor contractor must 
give that individual a right of first refusal. However, if the 
successor contractor needs that position to be full-time or part-time, 
the contractor can make that a requirement for hiring.
    Comments: A respondent noted that the DOL regulations expressly 
acknowledge that an offer by a successor contractor that contains 
different terms and conditions of employment is considered a bona fide 
offer and stated that no such provision was included in the proposed 
FAR rule.
    Response: The final rule adds a subsection to FAR 22.1203-4 
entitled ``Method of job offer.'' This subsection includes the elements 
required for a job offer to be considered ``bona fide.''
    Comments: A respondent suggested that the final rule would benefit 
if it provided additional guidance for contracting officers and 
contractors to better define when the rule is applicable. The 
respondent proposed the addition of some examples to assist 
interpretation of its applicability. Another respondent echoed the same 
comment.
    Response: Examples of the applicability of the SCA are included at 
FAR 22.1003-5, ``Some examples of contracts covered.'' In addition, a 
specific reference to the DOL final rule (29 CFR part 9) is added at 
FAR 22.1200, Scope of Subpart, and cross-references have been added 
where appropriate throughout the final rule.
    Comments: A respondent stated that the proposed rule imposed such 
significant changes in business practices for both predecessor and 
successor contractors that the rule should be applied only to new 
contracts that are first solicited after the effective date of the FAR 
rule and DOL's rule. The respondent stated that this would be 
appropriate for two reasons: (1) The FAR rule does not provide for 
agencies' waiving nondisplacement requirements for existing contracts; 
and (2) contractors with existing contracts should not be required to 
prepare for the imposition of the requirements in the middle of 
contract performance at some unknown future date. Yet, a second 
respondent stated that the final rule must ensure that no service 
contractor ``be permitted to not give employees notice of their right 
to continued employment with the successor contractor.''
    Response: The preamble to this final rule includes a section 
entitled ``Applicability,'' which invokes the standard applicability 
rules at FAR 1.108(d). The rule will not be applied retroactively 
unless there is a bilateral modification to the contract with 
consideration. In addition, this section of the preamble provides that 
contracting officers are expected to work with their existing service 
contractors and bilaterally modify their contracts, to the extent 
feasible to ensure that successor contractors under new solicitations 
will receive the required written notice and ensure contracting 
officers (and, hence, successor contractors) receive the employee list 
in sufficient time to ensure continuity of service. Specifically, under 
this rule, the predecessor contractor must provide a notice 30 days 
before the end of the contract. However, predecessor contractors 
performing at Federal facilities will already be operating under the 
existing notification clause set forth at FAR 52.222-41(n), under the 
SCA, which only requires a 10-day notice. While some have recommended 
that the rule be relaxed during the interim period, DOL explained in 
the preamble to its final rule that waiving the predecessor employees' 
right of first refusal of employment is not consistent with the E.O., 
and DOL is not authorized under the E.O. to provide such relief in any 
event.
    Comments: A respondent was concerned that the FAR rule creates a 
protest risk by the predecessor contractor, as it may not want its 
employees to work for its competitor.
    Response: For existing contracts, the predecessor contractor is 
required by paragraph (n) of the clause at FAR 52.222-41, Service 
Contract Act of 1965, to provide to the contracting officer a certified 
list, not less than 10 days prior to completion of any contract at a 
Federal facility, of the names of all service employees on the 
contractor's or its subcontractors' payroll during the last month of 
contract performance. This list must contain the anniversary dates of 
employment on the contract. This final rule requires, at paragraph 
(d)(1) of the clause at FAR 52.222-17, for the contractor to furnish 
the list, including anniversary dates, not less than 30 days prior to 
completion of performance under the predecessor contract. Furnishing 
the list is a contractual requirement for predecessor contractors, and 
the rules for the successor contractor to make job offers are similarly 
included in the contract. Therefore, there is little or no risk of a 
non-frivolous protest.
4. Exemptions and HUBZone Considerations
    Comments: Three comments were received concerning the policy 
statement and clause relating to the interaction of E.O. 13495 and 
other E.O.s or laws, such as the HUBZone provisions of the Small 
Business Act. One respondent stated that the rule did not consider the 
effect of E.O. 13495 on HUBZone small business concerns and

[[Page 75770]]

the ability to meet the HUBZone program's residency requirements, while 
another respondent wanted to emphasize the importance of excluding 
HUBZone small businesses from this rule. A third respondent thought 
that the rule should incorporate express guidance on how to comply with 
the nondisplacement obligations, while at the same time complying with 
a potentially conflicting law. This respondent believed the rule should 
incorporate an example into the rule, such as the one set forth in the 
preamble of the DOL regulation for HUBZone small business concerns.
    Response: The proposed rule considered the effect E.O. 13495 may 
have on HUBZone small business concerns. Specifically, the rule set 
forth a policy statement and a paragraph in the contract clause, which 
state that nothing in E.O. 13495 can be construed to permit a 
contractor or subcontractor to fail to comply with any provision of 
other E.O. or law. This would include a HUBZone small business 
concern's compliance with the HUBZone provisions of the Small Business 
Act and any contractor's or subcontractor's compliance with E.O. 11246 
(Equal Employment Opportunity) or the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974. Therefore, HUBZone small business 
concerns are not exempt from the E.O.; instead, the policy statement 
and clause explain that HUBZone small business concerns must try to 
meet the E.O.'s requirements in tandem with the HUBZone program's 
requirements. (See 76 FR 53720 at page 53723).
    Comments: One respondent stated that it was pleased the rule 
excluded service contracts and subcontracts awarded through the 
AbilityOne Program, which is administered by The Committee for Purchase 
From People Who Are Blind or Severely Disabled.
    Response: Noted.
5. Predecessor's List of Qualified Employees
    Comments: One respondent requested clarification for situations 
where the predecessor contract is split into more than one follow-on 
contract action. In this case, the respondent questioned whether the 
incumbent (predecessor) contractor would provide the agency only one 
list of covered employees or would be required to provide a list of 
covered employees for each of the follow-on contract actions.
    Response: As stated in FAR 22.1204(a), the predecessor contractor 
is required to furnish the contracting officer a list of all service 
employees under the predecessor contract and its subcontracts. In FAR 
22.1204(b), the contracting officer is responsible for providing the 
list to the successor contractor. In the respondent's scenario, where 
there is more than one successor contractor, then the contracting 
officer, not the predecessor contractor, would be responsible for 
providing the list to the successor contractors. Without regard to the 
number of successor contracts, there is no obligation for all of the 
predecessor's employees to get a job offer if the number of job 
openings on the successor contract(s) is lower than the number of 
qualified predecessor employees. However, if an employee of the 
predecessor contractor thinks that he/she has not been offered a job 
and should have been offered a job, the employee may file a complaint 
with the Wage and Hour Division of the DOL within 120 days of the first 
date of contract performance (see 29 CFR 9.21).
    Comments: One respondent noted that FAR 52.222-41(n) requires the 
contractor to submit a list of the names of all service employees and 
their anniversary dates of employment and that the proposed change at 
FAR 22.1204 requires no additional information. The respondent asked 
how the successor contractor would be able to contact these employees 
to offer employment when there is no information on how to contact the 
employees, what jobs these individuals held or were qualified for, or 
the individual's qualifications or work experience.
    Response: The lists are not required to include contact 
information. The DOL rule (29 CFR part 9) did not add a requirement for 
the predecessor contractor to provide contact information, and, if the 
predecessor contractor does not voluntarily provide contact 
information, then the successor contractor will still be required to 
reach out to those employees (see 29 CFR 9.12(a)(2) and 76 FR 53720 at 
53734) (e.g., posting notices of job fairs or holding a session with 
current employees).
    Comments: One respondent recommended sanctions against predecessor 
contractors that do not submit the certified list of employees within 
the required timeframe. Specifically, the respondent recommended the 
final rule include language allowing contracting officers to submit a 
negative performance review in the Federal Awardee Performance 
Integrity Information System (FAPIIS) or the Contractor Performance 
Assessment Reporting System (CPARS).
    Response: FAPIIS is intended to track information regarding 
criminal, civil, or administrative proceedings in connection with the 
award or performance of a Government contract; it is not appropriate 
for information regarding failure to meet a contract requirement. CPARS 
is the appropriate venue for contractor performance information. While 
contracting officers may choose to note the predecessor contractor's 
failure to provide the required list in a timely manner in CPARS, it is 
not necessary to remind contracting officers of each circumstance where 
non-performance may be reported in CPARS. FAR 22.1206(c) provides that 
the Government may suspend contract payments until the list is 
provided.
    Comments: A respondent suggested that the successor contractor 
should be required to offer employment to predecessor contractor 
employees who have worked on the predecessor contract for at least six 
months.
    Response: The DOL examined this same comment prior to publishing 
its final rule and stated that ``the Department does not agree that * * 
* predecessor contractors will be encouraged to `dump' unsuitable 
employees onto expiring contracts.'' Lengthening the period of 
employment with the predecessor contractor would not address the 
concern that the predecessor contractor may retain some of its most 
qualified workforce (76 FR 53720 at page 53738).
    Comments: One respondent stated it is unclear in FAR 52.222-
17(d)(2) and (e)(2) who is responsible for providing the predecessor 
contractor's list of employees to ``employees and their 
representatives.''
    Response: FAR 52.222-17(d)(2) and (e)(2) are revised in the final 
rule to match FAR 22.1204(b) and read as follows: ``(2) Immediately 
upon receipt of the certified service employee list but not before 
contract award, the contracting officer shall provide the certified 
service employee list to the successor contractor, and, if requested, 
to employees of the predecessor contractor or subcontractors or their 
authorized representatives.''
    Comments: Two respondents requested clarification with respect to 
the timing of required notices when the successor contractor will begin 
performance before the predecessor's contract ends, e.g., when there is 
a phase-in period.
    Response: The timing of the lists is mandated by the DOL and 
implemented at FAR 52.222-41(n) and the final rule at FAR 52.222-
17(d)(1).
    Comments: One respondent reiterated the requirement to submit an 
updated list ``not less than 10 days before completion of services on 
the

[[Page 75771]]

contractor'' and stated that this timeframe is inadequate for the 
successor contractors to inform, interview, and evaluate displaced 
workers prior to commencement of the contract. Another respondent asked 
that the rule be amended to require the incumbent (predecessor) 
contractor to identify its qualified service employees earlier in the 
procurement process. A third respondent requested that, when there is a 
protest of the successor contract, then an additional time period 
should be added to FAR 22.1204(b) to ensure that no potential source 
selection sensitive data is released prior to clearing all potential 
protest periods.
    Response: Under the final rule, the ten-day notification will apply 
only in cases where the predecessor contractor has assigned employees 
to, or removed employees from, the contract after the 30-day notice has 
been submitted to the contracting officer. The predecessor contractor 
is not precluded from providing a list prior to the 30-day requirement 
in the final rule. The contract clause requires that the predecessor 
contractor must provide the list not less than 30 days prior to the end 
of contract performance. The DOL rule does not provide for additional 
time to provide the list for any reason.
    Comments: One respondent asked how the contracting officer will 
know if the predecessor contractor is actually terminating the 
employment of the listed employees when the contract ends. In some 
cases, these employees may move to another job with the same 
contractor.
    Response: As stated at 29 CFR 9.12(c), the successor contractor is 
required to presume that all employees hired to work on the predecessor 
contract: (1) Will be terminated, (2) are service employees, and (3) 
performed suitable work under the contract. Once contacted by the 
successor contractor, employees on the list are free to accept or 
decline the offer of employment.
6. Predecessor's Written Notice to Employees
    Comments: A respondent asked how Government contracting officers 
can enforce the requirement for the predecessor contractor to provide 
written notice to its employees of their possible right to an offer of 
employment with the successor contractor when there is no longer any 
contractual agreement between the predecessor contractor and the 
Government.
    Response: Contracting officers may document the predecessor 
contractor's failure to provide the required notice to employees as an 
issue in a past performance evaluation. Completed past performance 
evaluations are made available to source selection officials evaluating 
offers for new contract awards. In addition, the contracting officer 
may suspend payments to the contractor until it complies with all 
contractual requirements. Further, in the case of willful or aggravated 
violations, then the contracting officer may refer the contractor to 
DOL or to the agency suspension and debarment official.
7. Which Employees Are Qualified
    Comments: Several respondents asked how the successor contractor 
could determine all the positions that the current employee was 
qualified to perform. The seniority list only provides very limited 
information.
    Response: The FAR and the DOL rule allow the contractor to ask for 
information about employee qualifications. See 29 CFR 9.12(b)(4), which 
requires a successor contractor to base its decision regarding an 
employee's qualifications on credible information provided by a 
knowledgeable source such as the predecessor contractor, the local 
supervisor, the employee, or the contracting agency. If the issue is 
unsuitable performance by a particular employee, the credible 
information must be in writing (29 CFR 9.12(c)(4)(ii)(A)). In its final 
rule preamble, the DOL explained that it would not require the list of 
employees to identify the relevant labor category, job duties, and 
current contact information, as the employee list is already a 
requirement of Federal service contractors under the SCA (see 76 FR 
53720 at page 53739).
    Comments: One respondent asked how the determination was to be made 
of which employees were qualified. According to the respondent, it was 
unclear whether this was to be determined by the predecessor contractor 
or, instead, anyone employed in the position during the last month of 
the contract was qualified.
    Response: The FAR proposed rule preamble incorrectly referred to 
the list of employees as a list of qualified employees (see 77 FR 26234 
in section E). The predecessor contractor does not determine whether 
the employee is qualified when the predecessor contractor makes the 
list. The successor contractor determines to which employees it will 
offer employment, based on the rule's requirements.
    Comments: The proposed rule, at FAR 22.1202(a), stated that 
employees have a right of refusal for positions for which he/she is 
qualified. A respondent asked how the successor contractor should 
determine who has priority for that position, e.g., should this be done 
by seniority, where the most senior employee would have first choice of 
every position until accepting one, or should the more qualified 
employee be given the first choice. The respondent wanted to know if it 
would matter if the successor contractor was unionized.
    Response: Executive Order 13495 does not mention seniority as a 
factor in offering a right of first refusal to employment. Therefore, 
the successor contractor will determine the order in which employees 
will be offered employment. Regardless of whether the successor 
contractor is unionized, the successor contractor determines which 
employees will be offered employment.
    Comments: A respondent stated that offerors would have a hard time 
preparing a proposal because they would not know the expected salaries 
for the incumbent (predecessor) contractor's employees.
    Response: This rule only concerns service employees covered by the 
SCA. Employees covered by the SCA would receive at least the minimum 
wage rates and fringe benefits required by the SCA procedures, based on 
prevailing rates or based on a collective bargaining agreement. (See 
FAR 22.1002). The SCA does not cover managerial, supervisory, or 
professional employees.
8. Poor Performance of Predecessor Employees
    Comments: One respondent (6) stated that existing workers may be 
slow or resistant to adopt changes that the incoming contractor may 
feel are necessary to meet goals. Another respondent noted that, if a 
new contractor is brought on because of poor performance of the 
predecessor contractor, and that performance is due more to the 
contractor's personnel in place rather than the management, the 
Government would be perpetuating the problem rather than solving it. 
Several respondents remarked that the incumbent (predecessor) 
contractor would keep its best employees and leave the worst ones for 
the incoming contractor; this would affect the incoming contractor's 
ability to do the work, disrupting the work, and injuring the 
contractor's reputation. Another respondent asked for additional 
flexibility to review qualifications of incumbent personnel when the 
predecessor contract was terminated for cause or default.
    Response: DOL did not agree that predecessor contractors will be 
encouraged to place unsuitable employees onto expiring contracts, and 
would retain its most qualified

[[Page 75772]]

workforce. DOL noted that employees not being retained would likely 
have more experience with the contract and contracting agency than new 
hires recruited by the successor contractor for the purpose of filling 
the contract requirements. (See 76 FR 53720 at page 53738). The 
successor contractor must extend offers to those service employees 
whose employment will be terminated; for those employees whose 
employment would not be terminated, the successor contractor may extend 
offers to them. DOL recognized that some predecessor contracts would be 
terminated for poor performance, but made clear that successor 
contractors were not to assume that this was the fault of the service 
employees rather than management; no extra time was given for review 
under this circumstance. An agency may waive subpart 22.12 application 
if the agency determines that performance problems on the predecessor 
contract are not just due to the management but the entire predecessor 
workforce failing individually, as well as collectively, and that it is 
not in the interest of economy and efficiency to provide supplemental 
training to the predecessor's workers. (See 29 CFR 9.4(d)(4)(ii)(C)).
    Comments: A respondent was concerned that the successor contractor 
would be unable to obtain information about the poor performance of a 
particular worker, and therefore would hire that poor performer. The 
contractor is required to presume that all employees working under the 
predecessor contract in the last month of performance performed 
suitable work on the contract. Neither the FAR Council's rule nor DOL's 
rule requires a predecessor contractor to provide performance 
information for predecessor employees. The respondent stated that the 
potential lack of information about these workers' past performance and 
the limited time in which to vet them deprives the successor contractor 
of appropriate tools to determine whether the predecessor employee 
failed to perform suitably. Another respondent commented that relying 
on the predecessor contractor or the Government to furnish past 
performance information on individual employees would be problematic.
    Response: The respondent is correct about the presumption and also 
correct that the predecessor contractor is not required to provide 
performance information. The emphasis of the E.O. is not on screening 
out predecessor employees, but on hiring them. Any evidence of poor 
performance by a particular employee needs to be credible information 
provided in writing by a knowledgeable source, such as the predecessor 
contractor and its subcontractors, the local supervisor, the employee, 
or the contracting agency. (See 29 CFR 9.12(c)(4)).
    Comments: Several respondents asked about predecessor employees who 
perform poorly under the new contract. The respondents asked if the 
successor contractor would have the right to fire them. The respondents 
also asked whether the Government would assume the responsibility and/
or risk for that poor performance or for performance that is lesser 
quality than the contractor could have provided with its own staff.
    Response: The Government expects the successor contractor to manage 
its employees, including the predecessor's former employees who have 
been hired. If the contractor terminates an employee under 
circumstances suggesting the offer of employment may not be bona fide, 
the facts and circumstances of the offer and the termination will be 
closely examined during any compliance action to ensure the offer was 
bona fide. (See 29 CFR 9.12(b)(6)). The successor contractor bears the 
responsibility for claiming an exception to the requirement to offer 
employment to any employee who had worked for the predecessor 
contractor (see FAR 22.1203-5). The successor contractor is expected to 
comply with the business ethics requirements of FAR subpart 3.10 and 
the relevant clauses in the contract.
    Comments: Several respondents asked about a successor contractor 
having different standards. If a successor contractor had a better 
qualified employee with proven capabilities, could the successor 
contractor keep and promote the employee after award of the contract, 
rather than replacing the employee with an incumbent employee. The 
respondents asked what would happen if the successor contractor 
proposed a solution using its own employees who were more qualified, or 
less costly, than the predecessor contractor's employees. The 
respondents also asked what would happen if the successor contractor 
has a different level of acceptable conduct and performance.
    Response: Paragraph (c)(1)(i) of FAR clause 52.222-17 allows the 
successor contractor to keep its own employees who would otherwise be 
facing lay-off or discharge, if the employee had worked for the 
successor contractor for at least three months before the commencement 
of the new contract. The purpose of the E.O. and the DOL rule, as well 
as the FAR rule, is to give a right of first refusal to qualified 
predecessor contract employees who would otherwise be terminated. The 
successor contractor's belief that it can supply employees which it 
believes are better qualified or less costly is not the issue here. For 
example, the successor contractor could not determine that otherwise-
qualified service employees are not qualified to perform the same or 
similar services on a successor contract because they lack a college 
degree. (See 76 FR 53720 at page 53736). The issue of an otherwise 
qualified employee being less qualified is different from the issue of 
an employee being unqualified or exhibiting unacceptable conduct or 
performance.
    Comments: One respondent expressed concern that the process could 
result in denying the Government the discretion to select a new service 
provider when the predecessor's employees were qualified but lacking in 
performance. The respondent added that the process will allow successor 
contractors and subcontractors to manipulate the system by submitting a 
bid using employees that the successor contractor has no intention of 
hiring and then, after award, replacing them with employees of the 
predecessor contractor who are poor performers.
    Response: Under the E.O., this rule, and 29 CFR part 9, the 
successor contractor is not required to offer a right of first refusal 
to any employee(s) whom it reasonably believes, based on the particular 
employee's past performance, has failed to perform suitably on the job. 
Additionally, the hypothetical workforce manipulation mentioned is 
unlikely to pose a problem, given that both the contracting agency and 
the successor contractor are aware of the rules on right-of-first 
refusal and the successor contractor clearly is responsible for the 
quality of its performance. The fact that the successor contractor has 
hired employees of the predecessor contractor does not absolve the 
former from the required level of performance.
9. Successor Efficiencies Require Fewer Employees
    Comments: A question was posed regarding whether a reduction in 
staffing by the successor contractor due to efficiencies required a 
waiver.
    Response: No waiver is required (FAR 22.1203-3) when the successor 
contractor employs fewer employees than the predecessor contractor due 
to efficiencies. The proposed rule is modified to include an additional 
provision addressing this issue: FAR 22.1203-6, entitled ``Reduced 
staffing.''
    Comments: Another respondent noted that the proposed rule did not 
include guidance in determining which of the predecessor contractor 
employees to

[[Page 75773]]

extend offers of employment when the successor contractor's solution 
results in reduced staffing. It was suggested that the final FAR rule 
include a provision similar to the DOL's regulation at 29 CFR 
9.12(d)(2) that allows the successor contractor to determine which of 
the predecessor contractor employees are provided offers of employment.
    Response: Because this rule implements both E.O. 13495 and the 
DOL's regulations at 29 CFR part 9, the guidance at 29 CFR 9.12(d)(2) 
should be followed. The service anniversary (``seniority'') date is not 
meant to imply that the successor contractor must offer positions 
according to seniority.
10. Successor Hiring Process
    Comments: Three respondents commented about the requirement for the 
offer to an employee to remain open for 10 days. This will potentially 
create a very long period to fill many positions when all the 
combinations and permutations are considered. If the prospective 
employee declines employment, it is possible that the successor 
contractor will be unable to find a suitable replacement on such short 
notice. Indeed, under the proposed rule, it is conceivable that a 
successor contractor may not have its workforce in place for months.
    Response: The contracting agency will be aware of these issues and 
should plan for such contingencies because compliance with E.O. 13495 
and 29 CFR part 9 is mandatory, not optional.
    Comments: One respondent asked either for the list to be provided 
with the release of the solicitation or for an equitable adjustment for 
the increased costs.
    Response: E.O. 13495 cited FAR 52.222-41(n) and the requirement to 
provide the certified list of employees no less than 10 days before the 
end of performance on the predecessor contract. Using its authority as 
Executive implementing agency for E.O. 13495, DOL extended that time 
period to no less than 30 days prior to completion of performance on 
the predecessor contract. The FAR does not further extend that amount 
of time.
    Comments: Three respondents were concerned with the prohibition in 
the DOL final rule at 29 CFR 9.12(b)(1) against screening employees 
prior to hire unless dictated by the agency or the terms of the 
contract. Many contractors have implemented Human Resources and 
recruiting systems that entail robust screening of all applicants with 
respect to their educational background and work history, drug use, and 
other factors that could impact work performance, particularly with 
respect to job duties that entail access to sensitive or proprietary 
government or contractor information. Requiring contractors to develop 
a separate system of policies and modified hiring and screening 
processes for follow-on service employees is burdensome, costly, and 
disruptive to many companies' existing practices. Many contractors use 
the pre-employment drug testing program to demonstrate compliance with 
the Drug Free Workplace Act of 1988 and implementing FAR regulations. 
Background checks are one of several tools that responsible employers 
use to ensure that trustworthy employees are assigned to perform 
Government contracts, for example where the jobs involve handling 
sensitive Government and third party personal information. The 
respondents requested a clear statement that successor contractors will 
be permitted to perform identical screenings for all employees, 
regardless of their status as qualifying for hire under the 
Nondisplacement of Qualified Workers under Service Contract rule.
    Response: DOL's preamble suggested that an offeror inform the 
contracting agency that the offeror requires drug screening of all of 
its service employees, and recommended that the contracting agency 
provide for such drug testing in connection with the service contract. 
See 76 FR 53720 at page 53735. The requirements of the DOL rule 
concerning employment screening processes such as drug tests, 
background checks, and security clearance checks (29 CFR 9.12(b)) are 
addressed at FAR 22.1203-4, Method of job offer.
11. Waiver
    Comments: A respondent suggested that the Government should provide 
supplemental information and/or subset lists to assist contracting 
officials with the written analysis as described in 29 CFR 9.4(d)(4)(i) 
in support of a waiver. The respondent expressed concern with the 
requirement that contracting officers must cross reference the 
requirements in 29 CFR 9.4 to effectuate the waiver.
    Response: The FAR implementation conforms to the requirements in 
the DOL regulations and the E.O. Cross-referencing 29 CFR 9.4(d) 
ensures that contracting officials are familiar with all appropriate 
considerations for waiver. As noted in 29 CFR 9.4(d)(4)(i), a waiver is 
only appropriate where ``any of the requirements of E.O. 13495 would 
not serve the purposes of this Order, or would impair the ability of 
the Federal Government to procure services on an economical and 
efficient basis.'' As waivers are meant to be limited exceptions, 
supplemental information is not necessary.
    Comments: One respondent noted that the waiver provisions at FAR 
22.1203-3 do not provide the option for the agency to waive only some 
provisions of the requirement. The respondent stated that an agency 
should be authorized to waive the entire nondisplacement obligation, or 
one or more individual provisions of the obligation, despite the fact, 
reported by the respondent in a footnote, that ``E.O. 13495 * * * does 
not address waivers in its text.'' Doing so, according to the 
respondent, would afford flexibility to agencies to determine how best 
to transition services efficiently under particular contracts and 
classes of contracts.
    Response: In fact, section 4 of E.O. 13495 addresses waivers, 
allowing for an agency waiver ``from the requirements of any or all of 
the provisions of the order * * *'' The DOL final rule, at 29 CFR 
9.4(d)(1), allows that an ``agency may exempt the agency from one or 
more individual provisions'' as an alternative to exempting the agency 
from all provisions of 29 CFR part 9. The FAR proposed rule also 
allowed for the waiver of some of the provisions of subpart 22.12 at 
FAR 22.1203-3(a).
    Comments: One respondent stated that, in keeping with FAR practice, 
contracting agency heads should be permitted to delegate waiver 
decision-making to the same extent they delegate other decisions. 
Another respondent also noted that approval levels for waivers should 
not rest at a level within the agency that would make obtaining a 
waiver unfeasible.
    Response: The final rule limits the waiver authority to the senior 
procurement executive, without power of redelegation. FAR 1.108(b) 
states that each authority is delegable unless specifically stated 
otherwise. It is common practice in the FAR to limit redelegation when 
appropriate. The determination to waive some or all of the provisions 
of FAR subpart 22.12 is most appropriately made by senior officials 
within agencies.
12. Miscellaneous and Editorial Comments
    Comments: A respondent stated that the FAR rule should mirror the 
DOL rule by incorporating limits on the Government's use of suspension 
and debarment action for violation under the non-displacement rule.
    Response: The final FAR rule references the DOL rule at FAR 22.1200 
and adds appropriate cross-references to the DOL rule throughout the 
FAR

[[Page 75774]]

coverage. The Governmentwide debarment and suspension authority is 
addressed at FAR subpart 9.4. That authority is in addition to the 
specific authority provided to DOL to debar or suspend an entity due to 
noncompliance with the implementation of E.O. 13495.
    Comments: One respondent indicated that the requirements of the 
E.O. will result in additional work for the Government contracting 
community to follow up to make sure that the contractor complies with 
the requirements.
    Response: There may be some additional contract administration 
responsibilities for the Government contracting officer, but these 
responsibilities will not be significant. In any case, these 
requirements are mandated by E.O. 13495 and 29 CFR part 9.
    Comments: One respondent recommended a number of edits which should 
be adopted to correct drafting errors and conform to the FAR Drafting 
Guide.
    Response: The edits have been made in the final rule.

C. Changes Requested by DOL

    Comments: DOL provided language to be added as a new subsection of 
FAR 22.1203, Applicability. The new subsection, to be entitled ``Method 
of job offer,'' springs from the requirements at 29 CFR 9.12(a), which 
states, in part, ``the contractor and its subcontractors shall make a 
bona fide, express offer of employment to a position for which the 
employee is qualified to each employee and shall state the time within 
which the employee must accept such offer, but in no case shall the 
period within which the employee must accept the offer of employment be 
less than 10 days.''
    Response: The new subsection FAR 22.1203-4, Method of job offer, is 
added in the final rule. In addition to restating the means of making a 
job offer and the minimum of 10 days for the employee's acceptance, the 
new subsection also explains in more detail what constitutes a ``bona 
fide'' job offer (based on 29 CFR 9.12(b), Method of job offer) and how 
to determine a predecessor employee's qualifications.
    Comments: DOL provided language to be added as a new subsection of 
FAR 22.1203, Applicability. The new subsection, to be entitled 
``Exceptions'' and numbered FAR 22.1203-5, is based on the requirements 
at 29 CFR 9.12(c), Exceptions, which provides the following exceptions 
from the requirement to provide the right of first refusal to employees 
of the predecessor contractor:
     Nondisplaced employees of the predecessor contractor.
     Successor's current employees who would otherwise face 
lay-off or discharge and who have worked for the successor contractor 
at least three months immediately preceding performance of the 
successor contract.
     Predecessor contractor's non-service employees.
     Predecessor contractor's employees with past unsuitable 
performance.
    Comments: DOL provided language to be added as a new subsection of 
FAR 22.1203, Applicability. The new FAR subsection, 22.1203-6, entitled 
``Reduced staffing,'' repeats some of the requirements in 29 CFR 
9.12(d), Reduced staffing.
    Response: The new FAR subsection 22.1203-6 addresses circumstances 
when the successor contractor need not offer employment to all of the 
displaced employees of the predecessor contractor. In addition, the new 
FAR subsection repeats the caveat from 29 CFR 9.12(d) that, when 
employment is not initially offered to all of the displaced employees, 
the successor contractor and its subcontractors still remain obligated 
for 90 days after the first date of performance on the contract to 
provide displaced employees a right of first refusal if additional 
service personnel are needed.

D. Other Issues

    29 CFR Section 9.12(e)(1) of the DOL regulations implementing E.O. 
13495 provides that the contractor shall furnish the contracting 
officer with a certified list of the names of all service employees 
working under the contract and its subcontracts at the time the list is 
submitted. This requirement is implemented in paragraph (d)(1) of FAR 
clause 52.222-17, Nondisplacement of Qualified Workers. Pursuant to 41 
U.S.C. 1304, a new non-statutory certification may not be included in 
the FAR unless written justification for such certification is provided 
to the OFPP Administrator by the FAR Council, and the Administrator 
approves such request in writing. In accordance with FAR 1.107, this 
non-statutory certification requirement was approved.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    Executive Order (E.O.) 13495, Nondisplacement of Qualified 
Workers Under Service Contracts, dated January 30, 2009, and the DOL 
implementing regulations, published August 29, 2011, in the Federal 
Register at 76 FR 53720, make the policy of the Federal Government 
to require service contractors and their subcontractors under 
successor contracts to offer employees of the predecessor contractor 
a right of first refusal of employment for positions for which they 
are qualified. The E.O. provides a contract clause for service 
contract solicitations that will succeed service contracts for 
performance of the same or similar work at the same location.
    Five comments were received on the initial regulatory 
flexibility analysis. Four of these comments alleged an increased 
administrative burden on contractors, and they failed to account for 
the decreased burden of not having to recruit and process new 
employees. The fifth comment requested the publication of a Small 
Entity Compliance Guide with the final rule. These comments did not 
cause a change in the final rule.
    No comments were received from the Office of Advocacy of the 
Small Business Administration on this rule because the office 
submitted comments on the DOL rule.
    The estimated impact that follows is based entirely upon the DOL 
figures reported in the proposed and final rules it published 
implementing E.O. 13495 (29 CFR part 9). Although DOL prepared an 
initial regulatory flexibility analysis, the agency, in the final 
rule, certified that 29 CFR part 9 does not have a significant 
economic impact on a substantial number of small entities. There is 
no additional impact due to the implementation of the DOL 
regulations in the FAR. The requirements in the FAR are taken from 
the E.O. and 29 CFR part 9 without addition.
    DOL estimated that 28,800 small entities will be subject to the 
regulations and the majority of these small entities will incur 
compliance costs of less than $100. The analysis offsets the actions 
that a successor contractor would already be taking, such as 
determining an individual's suitability for available positions and 
documenting employment decisions. Further, DOL assumed a time/cost 
savings on the part of small entities because the entities will not

[[Page 75775]]

have to engage in recruiting and training an entirely new workforce.
    The predecessor contractor is required to provide to the 
successor contractor a certified list of the names of all service 
employees working under that contract, and its subcontracts, no 
later than 30 days before completion of performance of the 
predecessor contract. DOL notes, however, that there is little or no 
cost associated with this requirement because the certified list 
contains the same information as the seniority list currently 
required to be provided under paragraph (n) of the clause at FAR 
52.222-41, Service Contract Act of 1965.
    The minimal new reporting requirements mandated by the DOL 
implementation of E.O. 13495 are addressed in the information 
collection justification submitted by DOL in connection with its 
final rule (see 76 FR 53720 dated August 29, 2011). No additional 
reporting requirements are imposed by the FAR final rule, which 
merely relocates the contract clause from 29 CFR part 9 into FAR 
part 52. The requirements of E.O. 13495 do not allow for any 
alternatives.
    Comments: Three respondents expressed concerns with the estimate 
in the proposed rule with respect to Initial Regulatory Flexibility 
Act (IRFA) analysis, which addresses the impact of the rule on small 
entities. According to the respondents, the estimated costs of this 
rule will be much higher than the Government's initial estimate. The 
respondents stated their belief that the Government did not consider 
the steps prime contractors must take to ensure smooth contract 
transitions, hiring staff and pricing proposals, and requested that 
the Government consider that, in some cases, successor contractors 
may not be able to automatically absorb predecessor contractor 
employees in a manner that creates a time/cost savings. One 
respondent explained that with the new rule, the successor will have 
to determine every available position and develop a matrix to allow 
a timely execution of offers. Another of these respondents said that 
it is unlikely that the successor contractor would be able to 
perform as efficiently with the predecessor employees as it would 
with a workforce of its own choosing.
    Response: The IRFA explained that it was based entirely upon the 
DOL's figures as set forth in the proposed and final rules that the 
DOL published implementing E.O. 13495. Although DOL prepared an 
IRFA, the agency, in the final rule, certified that 29 CFR part 9 
does not have a significant economic impact on a substantial number 
of small entities. The FAR rule does not impose any requirements 
other than those set forth in the DOL regulations, which implement 
the E.O. As a result, the Defense Acquisition Regulations Council 
and the Civilian Agency Acquisition Council continue to rely on 
DOL's certification that this rule will not have a significant 
economic impact on a substantial number of small entities.
    In addition, the Councils note that the actions required by the 
E.O. are those that a successor contractor would already be taking, 
such as determining an individual's suitability for available 
positions and documenting employment decisions. The Councils do not 
believe that the E.O. adds more to the steps the prime contractors 
must currently undertake to ensure smooth contract transitions, the 
hiring of staff, and the pricing of proposals. Rather, the successor 
contractor will offer the right of first refusal only if it has 
employment openings and will offer it only to those employees of the 
predecessor who the predecessor will not retain and are qualified 
for the position. As a result, DOL's IRFA assumed a time/cost 
savings on the part of small entities because they will not have to 
engage in recruiting and training an entirely new workforce.
    Comments: A respondent expressed a concern that requiring 
predecessor contractors to provide employee lists places an 
administrative burden on contractors.
    Response: Paragraph (n) of the clause at FAR 52.222-41 has for 
many years required a predecessor contractor to provide a list when 
the services were performed on a Federal facility. While this rule 
applies to all service contracts for the same or similar work 
performed at the same location, any additional administrative burden 
is minimal for businesses, including small entities that have a 
standard hiring process.
    Comments: A respondent felt that the FAR Council should provide 
small business contractors with a ``Small Entity Compliance Guide.''
    Response: The Small Entity Compliance Guide will be prepared by 
the Regulatory Secretariat in accordance with section 212 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. It 
consists of a summary of the rule appearing in the Federal 
Acquisition Circular, which amends the Federal Acquisition 
Regulation.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy 
of the FRFA to the Chief Counsel for Advocacy of the Small Business 
Administration.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; 
however, these changes to the FAR do not impose additional information 
collection requirements to the paperwork burden previously approved 
under Office of Management and Budget Control Number 1235-0007 and 
1235-0025, entitled Labor Standards for Federal Service Contracts--
Regulations 29 CFR part 4, and Nondisplacement of Qualified Workers 
Under Service Contracts, E.O. 13495, respectively.

List of Subjects in 48 CFR Parts 1, 2, 22, and 52

    Government procurement.

    Dated: December 14, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 22, and 52 
as set forth below:

0
1. The authority citation for 48 CFR parts 1, 2, 22, and 52 is revised 
to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM


1.106  [Amended]

0
2. Amend section 1.106, in the table following the introductory text, 
by adding in sequence, FAR segment ``22.12'' and its corresponding OMB 
Control Numbers ``1235-0007 and 1235-0025'', and FAR Segment ``52.222-
17'' and its OMB Control Numbers ``1235-0007 and 1235-0025''.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
3. Amend section 2.101, in paragraph (b), in the definition of ``United 
States'' by redesignating paragraphs (4) through (10) as paragraphs (5) 
through (11), respectively; and adding a new paragraph (4) to read as 
follows:


2.101  Definitions.

* * * * *
    (b) * * *
    United States * * *
    (4) For use in subpart 22.12, see the definition at 22.1201.
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
4. Amend section 22.001 by adding, in alphabetical order, the 
definitions ``Service contract'' and ``Service employees'' to read as 
follows:


22.001  Definitions.

* * * * *
    Service contract means any Government contract, or subcontract 
thereunder, the principal purpose of which is to furnish services in 
the United States through the use of service employees, except as 
exempted by the Service Contract Act (41 U.S.C. chapter 67; see 
22.1003-3 and 22.1003-4). See 22.1003-5 and 29 CFR 4.130 for a partial 
list of services covered by the Act.
    Service employee means any person engaged in the performance of a 
service

[[Page 75776]]

contract other than any person employed in a bona fide executive, 
administrative, or professional capacity, as those terms are defined in 
29 CFR part 541. The term ``service employee'' includes all such 
persons regardless of any contractual relationship that may be alleged 
to exist between a contractor or subcontractor and such persons.
* * * * *


22.1001  [Amended]

0
5. Amend section 22.1001 by removing the definitions ``Service 
contract'' and ``Service employee''.

0
6. Revise section 22.1103 to read as follows:


22.1103  Policy, procedures, and solicitation provision.

    All professional employees shall be compensated fairly and 
properly. Accordingly, the contracting officer shall insert the 
provision at 52.222-46, Evaluation of Compensation for Professional 
Employees, in solicitations for negotiated contracts when the contract 
amount is expected to exceed $650,000 and services are to be provided 
which will require meaningful numbers of professional employees. This 
provision requires that offerors submit for evaluation a total 
compensation plan setting forth proposed salaries and fringe benefits 
for professional employees working on the contract. Supporting 
information will include data, such as recognized national and regional 
compensation surveys and studies of professional, public and private 
organizations, used in establishing the total compensation structure. 
Plans indicating unrealistically low professional employee compensation 
may be assessed adversely as one of the factors considered in making an 
award.

0
7. Add Subpart 22.12 to read as follows:
Subpart 22.12--Nondisplacement of Qualified Workers Under Service 
Contracts
Sec.
22.1200 Scope of subpart.
22.1201 Definitions.
22.1202 Policy.
22.1203 Applicability.
22.1203-1 General.
22.1203-2 Exemptions.
22.1203-3 Waiver.
22.1203-4 Method of job offer.
22.1203-5 Exceptions.
22.1203-6 Reduced staffing.
22.1204 Certified service employee lists.
22.1205 Notification to contractors and service employees.
22.1206 Remedies and sanctions for violations of this subpart.
22.1207 Contract clause.

Subpart 22.12--Nondisplacement of Qualified Workers Under Service 
Contracts


22.1200  Scope of subpart.

    This subpart prescribes policies and procedures for implementing 
Executive Order 13495 of January 30, 2009, Nondisplacement of Qualified 
Workers Under Service Contracts, and related Secretary of Labor 
regulations and instructions (see 29 CFR part 9).


22.1201  Definitions.

    As used in this subpart--
    United States means the 50 States, the District of Columbia, Puerto 
Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. 
Virgin Islands, Johnston Island, Wake Island, and outer Continental 
Shelf as defined in the Outer Continental Shelf Lands Act (43 U.S.C. 
1331, et seq.), but does not include any other place subject to United 
States jurisdiction or any United States base or possession in a 
foreign country (see 29 CFR 4.112).


22.1202  Policy.

    (a) When a service contract succeeds a contract for performance of 
the same or similar services, as defined at 29 CFR 9.2, at the same 
location, the successor contractor and its subcontractors are required 
to offer those service employees that are employed under the 
predecessor contract, and whose employment will be terminated as a 
result of the award of the successor contract, a right of first refusal 
of employment under the contract in positions for which they are 
qualified. Executive Order 13495 generally prohibits employment 
openings under the successor contract until such right of first refusal 
has been provided, when consistent with applicable law.
    (b) Nothing in Executive Order 13495 shall be construed to permit a 
contractor or subcontractor to fail to comply with any provision of any 
other Executive order or law. For example, the requirements of the 
HUBZone Program (see subpart 19.13), Executive Order 11246 (Equal 
Employment Opportunity), and the Vietnam Era Veterans' Readjustment 
Assistance Act of 1974 may, in certain circumstances, conflict with the 
requirements of Executive Order 13495. All applicable laws and 
Executive orders must be satisfied in tandem with, and if necessary 
prior to, the requirements of Executive Order 13495 and this subpart.


22.1203  Applicability.


22.1203-1  General.

    This subpart applies to service contracts that succeed contracts 
for the same or similar services (29 CFR 9.2) at the same location.


22.1203-2  Exemptions.

    (a) This subpart does not apply to--
    (1) Contracts and subcontracts under the simplified acquisition 
threshold;
    (2) Contracts or subcontracts awarded pursuant to 41 U.S.C. chapter 
85, Committee for Purchase from People Who Are Blind or Severely 
Disabled;
    (3) Guard, elevator operator, messenger, or custodial services 
provided to the Government under contracts or subcontracts with 
sheltered workshops employing the ``severely handicapped'' as described 
in 40 U.S.C. 593;
    (4) Agreements for vending facilities entered into pursuant to the 
preference regulations issued under the Randolph Sheppard Act, 20 
U.S.C. 107; or
    (5) Service employees who were hired to work under a Federal 
service contract and one or more nonfederal service contracts as part 
of a single job, provided that the service employees were not deployed 
in a manner that was designed to avoid the purposes of this subpart.
    (b) The exemptions in paragraphs (a)(2) through (a)(4) of this 
subsection apply when either the predecessor or successor contract has 
been awarded for services produced or provided by the ``severely 
handicapped.''


22.1203-3  Waiver.

    (a) The senior procurement executive of the procuring agency may 
waive some or all of the provisions of this subpart after determining 
in writing that the application of this subpart would not serve the 
purposes of Executive Order 13495 or would impair the ability of the 
Federal Government to procure services on an economical and efficient 
basis. Such waivers may be made for a contract, subcontract, or 
purchase order, or with respect to a class of contracts, subcontracts, 
or purchase orders. See 29 CFR 9.4(d)(4) for regulatory provisions 
addressing circumstances in which a waiver could or would not be 
appropriate. The waiver must be reflected in a written analysis as 
described in 29 CFR 9.4(d)(4)(i) and must be completed by the contract 
solicitation date, or the waiver is inoperative. The senior procurement 
executive shall not redelegate this waiver authority.
    (b)(1) When an agency exercises its waiver authority with respect 
to any contract, subcontract, or purchase order, the contracting 
officer shall direct the contractor to notify affected workers and 
their collective bargaining representative in writing, no later than

[[Page 75777]]

five business days after the solicitation issuance date, of the 
agency's determination. The notice shall include facts supporting the 
determination. The contracting officer's failure to direct that the 
contractor provide the notice as provided in this subparagraph shall 
render the waiver decision inoperative, and the contracting officer 
shall include the clause at 52.222-17 in the solicitation.
    (2) Where a contracting agency waives application to a class of 
contracts, subcontracts, or purchase orders, the contracting officer 
shall, with respect to each individual solicitation, direct the 
contractor to notify incumbent workers and their collective bargaining 
representatives in writing, no later than five business days after each 
solicitation issuance date, of the agency's determination. The notice 
shall include facts supporting the determination. The contracting 
officer's failure to direct that the contractor provide the notice 
provided in this subparagraph shall render the waiver decision 
inoperative, and the contracting officer shall include the clause at 
52.222-17 in the solicitation.
    (3) In addition, the agency shall notify the Department of Labor of 
its waiver decision and provide the Department of Labor with a copy of 
its written analysis no later than five business days after the 
solicitation issuance date (see 29 CFR 9.4(d)(2)). Failure to comply 
with this notification requirement shall render the waiver decision 
inoperative, and the contracting officer shall include the clause at 
52.222-17 in the solicitation. The waiver decision and related written 
analysis shall be sent to the following address: U.S. Department of 
Labor, Wage and Hour Division, Branch of Government Contracts 
Enforcement, 200 Constitution Avenue, Room S-3006, Washington, DC 
20210, or email to: [email protected].


22.1203-4  Method of job offer.

    A job offer made by a successor contractor must be a bona fide 
express offer of employment on the contract. Each bona fide express 
offer made to a qualified service employee on the predecessor contract 
must have a stated time limit of not less than 10 days for an employee 
response. Prior to the expiration of the 10-day period, the contractor 
is prohibited from offering employment on the contract to any other 
person, subject to the exceptions at 22.1203-5. Any question concerning 
an employee's qualifications shall be decided based upon the 
individual's education and employment history, with particular emphasis 
on the employee's experience on the predecessor contract, and a 
contractor may utilize employment screening processes only when such 
processes are provided for by the contracting agency, are conditions of 
the service contract, and are consistent with the Executive Order. An 
offer of employment will be presumed to be bona fide even if it is not 
for a position similar to the one the employee previously held, but is 
one for which the employee is qualified, and even if it is subject to 
different employment terms and conditions, including changes to pay or 
benefits. (See 29 CFR 9.12(b) for regulatory provisions addressing 
circumstances in which a bona fide offer of employment can occur.)


22.1203-5  Exceptions.

    (a) A successor contractor or its subcontractors are not required 
to offer employment to any service employee of the predecessor 
contractor who--
    (1) Will be retained by the predecessor contractor.
    (2) The successor contractor or any of its subcontractors 
reasonably believes, based on the particular service employee's past 
performance, has failed to perform suitably on the job. (See 29 CFR 
9.12(c)(4) for regulatory provisions addressing circumstances in which 
this exception would or would not be appropriate.)
    (b) A successor contractor or its subcontractors may employ under 
the contract any of its current service employees who (1) have worked 
for the successor contractor or its subcontractors for at least three 
months immediately preceding the commencement of the successor 
contract, and (2) would otherwise face lay-off or discharge.
    (c) The successor contractor bears the responsibility of 
demonstrating the appropriateness of claiming any of the preceding 
exceptions and the exemption listed at 22.1203-2(a)(5) involving 
nonfederal work.


22.1203-6  Reduced staffing.

    A successor contractor and its subcontractors may employ fewer 
service employees than the predecessor contractor employed in 
connection with performance of the work. Thus, the successor contractor 
need not offer employment on the contract to all service employees on 
the predecessor contract, but must offer employment only to the number 
of eligible service employees the successor contractor believes 
necessary to meet its anticipated staffing pattern. Where a successor 
contractor does not initially offer employment to all the predecessor 
contract service employees, the obligation to offer employment shall 
continue for 90 days after the successor contractor's first date of 
performance on the contract. (See 29 CFR 9.12(d) for regulatory 
provisions addressing circumstances in which reduced staffing can 
occur.)


22.1204  Certified service employee lists.

    (a) Not less than 30 days before completion of the contract, the 
predecessor contractor is required to furnish to the contracting 
officer a certified list of the names of all service employees working 
under the contract and its subcontracts at the time the list is 
submitted. The certified list must also contain anniversary dates of 
employment of each service employee under the contract and subcontracts 
for services. The information on this list is the same as that on the 
seniority list required by paragraph (n) of the clause at 52.222-41, 
Service Contract Act of 1965. If there are no changes to the workforce 
before the predecessor contract is completed, then the predecessor 
contractor is not required to submit a revised list 10 days prior to 
completion of performance and the requirements of 52.222-41(n) are met. 
When there are changes to the workforce after submission of the 30-day 
list, the predecessor contractor shall submit a revised certified list 
not less than 10 days prior to performance completion.
    (b) Immediately upon receipt of the certified service employee list 
but not before contract award, the contracting officer shall provide 
the certified service employee list to the successor contractor, and, 
if requested, to employees of the predecessor contractor or 
subcontractors or their authorized representatives.


22.1205  Notification to contractors and service employees.

    (a) The contracting officer shall direct that the predecessor 
contractor provides written notice to service employees of their 
possible right to an offer of employment with the successor contractor. 
The written notice shall be--
    (1) Posted in a conspicuous place at the worksite; or
    (2) Delivered to the service employees individually. If such 
delivery is via email, the notification must result in an electronic 
delivery receipt or some other reliable confirmation that the intended 
recipient received the notice.
    (b) Contracting officers may advise contractors to provide the 
notice in Appendix B to 29 CFR chapter 9. Where a significant portion 
of the predecessor contractor's workforce is not fluent in English, the 
contractor shall provide the

[[Page 75778]]

notice in English and the language(s) with which service employees are 
more familiar. English and Spanish versions of the notice are available 
on the Department of Labor Web site at http://www.dol.gov/whd/govcontracts.


22.1206  Remedies and sanctions for violations of this subpart.

    (a) The Secretary of Labor has the authority to issue orders 
prescribing appropriate remedies, including, but not limited to, 
requiring the successor contractor to offer employment, in positions 
for which the employees are qualified, to service employees from the 
predecessor contract and payment of wages lost. (See 29 CFR 9.24(a)).
    (b) After an investigation (see 29 CFR 9.23) and a determination by 
the Administrator, Wage and Hour Division, Department of Labor, that 
lost wages or other monetary relief is due, the Administrator may 
direct that so much of the accrued payments due on either the contract 
or any other contract between the contractor and the Government shall 
be withheld as are necessary to pay the monies due. Upon the final 
order of the Secretary of Labor that such monies are due, the 
Administrator may direct that such withheld funds be transferred to the 
Department of Labor for disbursement. (See 29 CFR 9.24(c)).
    (c) If the contracting officer or the Administrator, Wage and Hour 
Division, Department of Labor, finds that the predecessor contractor 
has failed to provide the list required by 22.1204, the contracting 
officer may, in his or her discretion, or on request by the 
Administrator, suspend contract payment until such time as the 
contractor provides the list to the contracting officer.
    (d) The Secretary of Labor may also suspend or debar a contractor 
or subcontractor for a period of up to three years for violations of 29 
CFR part 9.


22.1207  Contract clause.

    The contracting officer shall insert the clause at 52.222-17, 
Nondisplacement of Qualified Workers, in solicitations and contracts 
for (1) service contracts, as defined at 22.001, (2) that succeed 
contracts for performance of the same or similar work at the same 
location and (3) that are not exempted by 22.1203-2 or waived in 
accordance with 22.1203-3.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Amend section 52.212-5 by--
0
(a) Revising the date of the clause;
0
(b) Redesignating paragraphs (c)(7) and (c)(8) as paragraphs (c)(8) and 
(c)(9), respectively;
0
(c) Adding a new paragraph (c)(7); and
0
(d) Adding paragraph (e)(1)(iii).
    The revision and additions read as follows:


52.212-5  Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes of 
Executive Orders--Commercial Items (JAN 2013)

* * * * *
    (c) * * *
    ----(7) 52.222-17, Nondisplacement of Qualified Workers (JAN 
2013) (E.O.13495).
* * * * *
    (e)(1) * * *
    (iii) 52.222-17, Nondisplacement of Qualified Workers (JAN 2013) 
(E.O. 13495). Flow down required in accordance with paragraph (l) of 
FAR clause 52.222-17.
* * * * *


0
9. Add section 52.222-17 to read as follows:


52.222-17  Nondisplacement of Qualified Workers.

    As prescribed in 22.1207, insert the following clause:

Nondisplacement of Qualified Workers (JAN 2013)

    (a) Service employee, as used in this clause, means any person 
engaged in the performance of a service contract other than any 
person employed in a bona fide executive, administrative, or 
professional capacity, as those terms are defined in 29 CFR part 
541. The term ``service employee'' includes all such persons 
regardless of any contractual relationship that may be alleged to 
exist between a contractor or subcontractor and such persons.
    (b) The Contractor and its subcontractors shall, except as 
otherwise provided herein, in good faith offer those service 
employees employed under the predecessor contract whose employment 
will be terminated as a result of award of this contract or the 
expiration of the contract under which the service employees were 
hired, a right of first refusal of employment under this contract in 
positions for which the service employees are qualified.
    (1) The Contractor and its subcontractors shall determine the 
number of service employees necessary for efficient performance of 
this contract and may elect to employ fewer employees than the 
predecessor Contractor employed in connection with performance of 
the work.
    (2) Except as provided in paragraph (c) of this clause, there 
shall be no employment opening under this contract, and the 
Contractor and any subcontractors shall not offer employment under 
this contract, to any person prior to having complied fully with 
this obligation.
    (i) The successor Contractor and its subcontractors shall make a 
bona fide express offer of employment to each service employee as 
provided herein and shall state the time within which the service 
employee must accept such offer, but in no case shall the period 
within which the service employee must accept the offer of 
employment be less than 10 days.
    (ii) The successor Contractor and its subcontractors shall 
decide any question concerning a service employee's qualifications 
based upon the individual's education and employment history, with 
particular emphasis on the employee's experience on the predecessor 
contract, and the Contractor may utilize employment screening 
processes only when such processes are provided for by the 
contracting agency, are conditions of the service contract, and are 
consistent with Executive Order 13495.
    (iii) Where the successor Contractor does not initially offer 
employment to all the predecessor contract service employees, the 
obligation to offer employment shall continue for 90 days after the 
successor contractor's first date of performance on the contract.
    (iv) An offer of employment will be presumed to be bona fide 
even if it is not for a position similar to the one the employee 
previously held, but is one for which the employee is qualified, and 
even if it is subject to different employment terms and conditions, 
including changes to pay or benefits. (See 29 CFR 9.12 for a 
detailed description of a bonafide offer of employment).
    (c)(1) Notwithstanding the obligation under paragraph (b) of 
this clause, the successor Contractor and any subcontractors (i) may 
employ under this contract any service employee who has worked for 
the contractor or subcontractor for at least three months 
immediately preceding the commencement of this contract and who 
would otherwise face lay-off or discharge, (ii) are not required to 
offer a right of first refusal to any service employee(s) of the 
predecessor contractor who are not service employees within the 
meaning of the Service Contract Act, 41 U.S.C. 6701(3), and (iii) 
are not required to offer a right of first refusal to any service 
employee(s) of the predecessor contractor whom the Contractor or any 
of its subcontractors reasonably believes, based on the particular 
service employee's past performance, has failed to perform suitably 
on the job (see 29 CFR 9.12(c)(4) for additional information). The 
successor Contractor bears the responsibility of demonstrating the 
appropriateness of claiming any of these exceptions.
    (2) In addition, any Contractor or subcontractor that has been 
certified by the U.S. Small Business Administration as a HUBZone 
small business concern must ensure that it complies with the 
statutory and regulatory requirements of the HUBZone Program (e.g., 
it must ensure that at least 35 percent of all of its employees 
reside within a HUBZone). The HUBZone small business Contractor or 
subcontractor must consider

[[Page 75779]]

whether it can meet the requirements of this clause and Executive 
Order 13495 while also ensuring it meets the HUBZone Program's 
requirements.
    (3) Nothing in this clause shall be construed to permit a 
Contractor or subcontractor to fail to comply with any provision of 
any other Executive order or law. For example, the requirements of 
the HUBZone Program (see FAR subpart 19.13), Executive Order 11246 
(Equal Employment Opportunity), and the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974 may conflict, in certain 
circumstances, with the requirements of Executive Order 13495. All 
applicable laws and Executive orders must be satisfied in tandem 
with, and if necessary prior to, the requirements of Executive Order 
13495, 29 CFR part 9, and this clause.
    (d)(1) The Contractor shall, not less than 30 days before 
completion of the Contractor's performance of services on the 
contract, furnish the Contracting Officer with a certified list of 
the names of all service employees working under this contract and 
its subcontracts at the time the list is submitted. The list shall 
also contain anniversary dates of employment of each service 
employee under this contract and its predecessor contracts with 
either the current or predecessor contractors or their 
subcontractors. Where changes to the workforce are made after the 
submission of the certified list described in this paragraph, the 
Contractor shall, in accordance with paragraph (e) of this clause, 
not less than 10 days before completion of the services on this 
contract, furnish the Contracting Officer with an updated certified 
list of the names of all service employees employed within the last 
month of contract performance. The updated list shall also contain 
anniversary dates of employment, and, where applicable, dates of 
separation of each service employee under the contract and its 
predecessor contracts with either the current or predecessor 
Contractors or their subcontractors.
    (2) Immediately upon receipt of the certified service employee 
list but not before contract award, the contracting officer shall 
provide the certified service employee list to the successor 
contractor, and, if requested, to employees of the predecessor 
contractor or subcontractors or their authorized representatives.
    (3) The Contracting Officer will direct the predecessor 
Contractor to provide written notice (Appendix B to 29 CFR chapter 
9) to service employees of their possible right to an offer of 
employment with the successor contractor. Where a significant 
portion of the predecessor Contractor's workforce is not fluent in 
English, the notice shall be provided in English and the language(s) 
with which service employees are more familiar. The written notice 
shall be--
    (i) Posted in a conspicuous place at the worksite; or
    (ii) Delivered to the service employees individually. If such 
delivery is via email, the notification must result in an electronic 
delivery receipt or some other reliable confirmation that the 
intended recipient received the notice.
    (e)(1) If required in accordance with 52.222-41(n), the 
predecessor Contractor shall, not less than 10 days before 
completion of this contract, furnish the Contracting Officer a 
certified list of the names of all service employees working under 
this contract and its subcontracts during the last month of contract 
performance. The list shall also contain anniversary dates of 
employment of each service employee under this contract and its 
predecessor contracts either with the current or predecessor 
Contractors or their subcontractors. If there are no changes to the 
workforce before the predecessor contract is completed, then the 
predecessor Contractor is not required to submit a revised list 10 
days prior to completion of performance and the requirements of 
52.222-41(n) are met. When there are changes to the workforce after 
submission of the 30-day list, the predecessor Contractor shall 
submit a revised certified list not less than 10 days prior to 
performance completion.
    (2) Immediately upon receipt of the certified service employee 
list but not before contract award, the contracting officer shall 
provide the certified service employee list to the successor 
contractor, and, if requested, to employees of the predecessor 
contractor or subcontractors or their authorized representatives.
    (f) The Contractor and subcontractor shall maintain the 
following records (regardless of format, e.g., paper or electronic) 
of its compliance with this clause for not less than a period of 
three years from the date the records were created.
    (1) Copies of any written offers of employment or a 
contemporaneous written record of any oral offers of employment, 
including the date, location, and attendance roster of any service 
employee meeting(s) at which the offers were extended, a summary of 
each meeting, a copy of any written notice that may have been 
distributed, and the names of the service employees from the 
predecessor contract to whom an offer was made.
    (2) A copy of any record that forms the basis for any exemption 
claimed under this part.
    (3) A copy of the service employee list provided to or received 
from the contracting agency.
    (4) An entry on the pay records of the amount of any retroactive 
payment of wages or compensation under the supervision of the 
Administrator of the Wage and Hour Division to each service 
employee, the period covered by such payment, and the date of 
payment, and a copy of any receipt form provided by or authorized by 
the Wage and Hour Division. The Contractor shall also deliver a copy 
of the receipt to the service employee and file the original, as 
evidence of payment by the Contractor and receipt by the service 
employee, with the Administrator or an authorized representative 
within 10 days after payment is made.
    (g) Disputes concerning the requirements of this clause shall 
not be subject to the general disputes clause (52.233-1) of this 
contract. Such disputes shall be resolved in accordance with the 
procedures of the Department of Labor set forth in 29 CFR part 9. 
Disputes within the meaning of this clause include disputes between 
or among any of the following: The Contractor, the contracting 
agency, the U.S. Department of Labor, and the service employees 
under the contract or its predecessor contract. The Contracting 
Officer will refer any service employee who wishes to file a 
complaint, or ask questions concerning this contract clause, to the: 
Branch of Government Contracts Enforcement, Wage and Hour Division, 
U.S. Department of Labor, 200 Constitution Avenue NW., Washington, 
DC 20210. Contact email: [email protected].
    (h) The Contractor shall cooperate in any review or 
investigation by the Department of Labor into possible violations of 
the provisions of this clause and shall make such records requested 
by such official(s) available for inspection, copying, or 
transcription upon request.
    (i) If it is determined, pursuant to regulations issued by the 
Secretary of Labor (Secretary), that the Contractor or its 
subcontractors are not in compliance with the requirements of this 
clause or any regulation or order of the Secretary, appropriate 
sanctions may be imposed and remedies invoked against the Contractor 
or its subcontractors, as provided in Executive Order 13495, the 
regulations, and relevant orders of the Secretary, or as otherwise 
provided by law.
    (j) The Contractor shall take such action with respect to any 
such subcontract as may be directed by the Secretary of Labor as a 
means of enforcing such provisions, including the imposition of 
sanctions for noncompliance. However, if the Contractor, as a result 
of such direction, becomes involved in litigation with a 
subcontractor, or is threatened with such involvement, the 
Contractor may request that the United States, through the 
Secretary, enter into such litigation to protect the interests of 
the United States.
    (k) The Contracting Officer will withhold, or cause to be 
withheld, from the prime Contractor under this or any other 
Government contract with the same prime Contractor, such sums as an 
authorized official of the Department of Labor requests, upon a 
determination by the Administrator, the Administrative Law Judge, or 
the Administrative Review Board, that there has been a failure to 
comply with the terms of this clause and that wages lost as a result 
of the violations are due to service employees or that other 
monetary relief is appropriate. If the Contracting Officer or the 
Administrator, upon final order of the Secretary, finds that the 
Contractor has failed to provide a list of the names of service 
employees working under the contract, the Contracting Officer may, 
in his or her discretion, or upon request by the Administrator, take 
such action as may be necessary to cause the suspension of the 
payment of contract funds until such time as the list is provided to 
the Contracting Officer.
    (l) Subcontracts. In every subcontract over the simplified 
acquisition threshold entered into in order to perform services 
under this contract, the Contractor shall include a provision that 
ensures--
    (1) That each subcontractor will honor the requirements of 
paragraphs (b) through (c) of this clause with respect to the 
service

[[Page 75780]]

employees of a predecessor subcontractor or subcontractors working 
under this contract, as well as of a predecessor Contractor and its 
subcontractors;
    (2) That the subcontractor will provide the Contractor with the 
information about the service employees of the subcontractor needed 
by the Contractor to comply with paragraphs (d) and (e) of this 
clause; and
    (3) The recordkeeping requirements of paragraph (f) of this 
clause.


(End of clause)

[FR Doc. 2012-30592 Filed 12-20-12; 8:45 am]
BILLING CODE 6820-EP-P